Uber, Lyft and other big-name companies aim to compete with Paypal as major payment system
Uber is preparing to announce a partnership with a major US payment service provider to offer a major competitor to PayPal.
The announcement comes as a major wave of US regulators are examining the viability of the nascent payments market, as regulators in other countries look to adopt their own payment systems and to tackle the rise of so-called “fusion payments” from large technology companies to traditional financial institutions.
The companies, which have made major inroads in recent months by opening up their payment systems to wider consumers, said in a blog post on Monday that they were partnering with Paypals to create a payment system that would be “as close to a direct competitor to [Paypal] as possible”.
The new system would be the result of a partnership between Uber and a payment platform that already operates in several US states, according to the blog post.
It will be the first time that Uber has partnered with a US company, though Uber has worked with a number of other US companies.
It has partnered for a number years with Lyft in the US, and its own mobile payments platform in the past.
The new payment system would allow drivers to request cash payments from their passengers.
The new system will use a technology called ‘Pax’ that Uber bought in October.
Pax is a payment processor for payments that works with major US credit card companies.
The company said it has already received about $500m (£310m) in financing, which will support the creation of a payment service for all drivers.
“Our partnership with Paypa will provide an additional layer of security to our customers and make our payment system easier for them to use and operate,” Uber said in the blog.
“The new Pax payment system is designed to support a wide range of payments, including credit cards, debit cards, and loyalty programs.”
The new partnership is a major step for Uber, which is already the world’s largest payments service by traffic, and is looking to compete against its closest rivals in Europe, including PayPal and Mastercard.
PayPal and other US payments services already offer a variety of payment options for consumers.
In addition to the new system, Uber said it would begin to offer credit cards as well as a “digital wallet” that would enable users to store their payments securely.
Paypal’s chief executive, Brad Smith, said the partnership with Uber would help drive growth for both the company and its drivers.
Uber has already opened its own payment system in the UK, where it said it will be able to compete in the future with credit card firms and other payment providers.
In a statement, it said: “Uber and Paypal have been collaborating on this partnership for a few years and it is a win-win for both Uber and the UK economy.”
But some critics are sceptical that Uber and Paypa have much room to grow if they want to compete, and the announcement could set off a number legal disputes between the companies.
Uber’s move to partner with PayPal is part of a broader drive by the company to attract more US drivers.
The service launched in the United States in late 2016 and currently has about 200,000 drivers.
The payment service will not be a part of the new Uber network, but will instead be integrated with existing Uber and Lyft apps, Uber chief executive Travis Kalanick said in an interview on Monday.
The US Department of Justice is currently reviewing whether the existing payment systems can be used by ride-hailing companies like Uber and other services to operate in the country.
It is expected to issue a decision by the end of this year.
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